A Beginner’s Guide to Litecoin Mining
thus you ‘ve heard about Litecoin mining and you want to find out more. This foliate is for you .
What is Litecoin?
See the Litecoin Association ‘s introductory television to Litecoin .
just like its older brother Bitcoin, Litecoin is an online net that people can use to send payments from one person to another. Litecoin is peer-to-peer and decentralized, meaning that it is not controlled by any single entity or government. The requital organization does not handle physical currencies, like the dollar or the euro ; alternatively, it uses its own unit of account, which is besides called litecoin ( symbol : Ł or LTC ). This is why you will often see Litecoin categorized as a virtual or digital currency. Litecoins can be bought and sold for traditional money at a variety show of exchanges available online .
If you already know Bitcoin, Litecoin is very exchangeable, the two main differences being that it has faster confirmation times and it uses a different hash algorithm.
What is Mining?
rather of having one central agency that secures and controls the money provide ( like most governments do for their national currencies ), Litecoin spreads this workplace across a network of “ miners ”. Miners assemble all new transactions appearing on the Litecoin network into large bundles called blocks, which jointly constitute an authoritative record of all transactions always made, the blockchain .
The manner Litecoin makes certain there is only one blockchain is by making blocks truly arduous to produce. So rather of just being able to make blocks at will, miners have to produce a cryptanalytic hash of the block that meets certain criteria, and the only way to find one is to try computing many of them until you get lucky and find one that works. This march is referred to as hashing. The miner that successfully creates a block is rewarded with 12.5 newly minted litecoins .
Every few days, the difficulty of the criteria for the hash is adjusted based on how frequently blocks are appearing, so more contest between miners equals more workplace needed to find a barricade. This network difficulty, thus called because it is the lapp for all miners, can be quantified by a number ; right now, it is 15,978,011 .
Should You Mine Litecoins?
Litecoin mining can be profitable, but only under certain conditions. In the early days people could make a profit by mining with their CPUs and GPUs, but that is no more the event today. The introduction of specialize mining hardware ( normally referred to as ASICs ), which can mine much faster and much more efficiently, has made finding blocks much harder with general-purpose hardware .
If you compare the profitableness analyses for a CPU, a GPU and an ASIC, you will see that the costs of CPU and GPU mine largely exceed the rewards, and even with free electricity the profits are so belittled that they are barely worth the campaign.
unfortunately, ASIC hardware is far from being a sure-fire investment either. likely buyers should be highly careful, as versatile elements should be considered :
- Power consumption: you don’t want to pay more in electricity than you earn in litecoins.
- Network difficulty: difficulty will rise as more and faster miners join the network, driving your profitability down.
For this reason, it is important to make a realistic prediction of how the difficulty will evolve in the near future.
- Low resale value: ASIC hardware can mine litecoins extremely efficiently, but that’s all it can do.
It cannot be refitted for other purposes, so the resale value is very low.
- Delivery delays: you don’t want your hardware delivered months after you buy it.
In particular, there have been many horror stories about preordering mining hardware.
Most importantly : constantly do your own inquiry, and never trust any single source of information. good starting points are LitecoinTalk.io and the /r/litecoin and /r/litecoinmining subreddits .
Do n’t feel like investing in expensive hardware ? That ‘s finely ! not everyone needs to be a miner. In fact, the easiest way to get started with Litecoin is to buy some at an change .
What are Mining Pools?
As we ‘ve seen above, finding a auction block is identical heavily. even with brawny hardware, it could take a solo miner months, or even years ! This is why mining pools were invented : by sharing their work world power, miners can find blocks much faster. Pool users earn shares by submitting valid validation of work, and are then rewarded according to the amount of work they contributed to solving a auction block .
The honor systems used by mining pools can be approximately subdivided into two categories : proportional systems and pay-per-share systems.
- Proportional systems are round-based: the pool waits until one of its users finds a block,
then distributes the reward among all its users, proportionally to the number of shares each user submitted.
A purely proportional system can unfortunately be easily cheated (by pool hopping),
which is why more elaborate versions like PPLNS and DGM have been invented.
- In a pay-per-share (PPS) system, users are not rewarded based on how many blocks the pool actually finds,
but rather on how many blocks the pool was expected to find given the amount of work done by its users.
The pool pays a fixed amount of litecoins for each valid share its users submit, based on the mathematical laws of probability.
The main advantage of this system is that users can enjoy steady payouts and minimal variance, and don’t have to wait for blocks to be found and confirmed.
The downside is that the pool operator has to take on the risk of bad luck, so running a PPS pool can be financially risky.
Choosing a mine consortium can be a very personal decisiveness, and respective factors should be taken into retainer, including features, dependability, respectability, and user patronize .
What Software to Use?
ASIC devices normally come with mining software preinstalled on an integrated control, and require small to no configuration. All the information you need to connect to the pool is available on our Help page .
If you have decided to do some CPU mine ( just for the fun of it, since as we ‘ve seen above you are not going to make any profit ), you could download Pooler ‘s cpuminer. GPU mine is well harder to set up, and not much more effective than CPU mining when compared to ASICs. Therefore, unless you’re a historian doing research on the early days of Litecoin, GPU mine is about surely a bad idea .